Cities and the Geography of Financial Centres

CEPR Discussion Paper Series No. 1894

Posted: 13 Oct 1998

Date Written: June 1998


This paper surveys the literature on the geography of financial activity in order to assess the role of financial centres. While there is widespread concern that rapid technological progress especially in communication and information technologies will ultimately lead to a delocalization of financial activity, the role of financial centres depends delicately on their success in generating local externalities. On the basis of empirical evidence on recent developments in world financial markets, it is argued that the ability of financial centres to attract financial activity in information sensitive securities will be crucial for their future role. To the extent that information is localized and market access is costly, financial centres perform an important role in aggregating local information. Therefore a reduction of global market access and information costs may increase global demand for local securities, and even strengthen the role of certain financial centres. Furthermore, complementarities between informationally sensitive and less sensitive financial activities may also attract footloose activities to financial centres.

JEL Classification: G15, R12

Suggested Citation

Gehrig, Thomas, Cities and the Geography of Financial Centres (June 1998). CEPR Discussion Paper Series No. 1894, Available at SSRN:

Thomas Gehrig (Contact Author)

University of Vienna ( email )

Oskar-Morgenstern-Platz 1
Vienna, A-1090

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